RBS 'Close To Sale' Of Brokerage Arm Hoare Govett To Jeffries

RBS is likely to clinch a deal to sell its corporate brokerage arm, Hoare Govett, to the American investment bank Jeffries, on Monday, as the state-owned lender continues to pull back from all but its core banking business, according to analysts.

The unit is small, with less than 100 employees, and retains only a few major FTSE-100 clients. The fee is believed to be small.

Under Hester, the bank has been retrenching back into traditional banking, shedding large as many as 4,000 staff from the investment banking arm that his predecessor, Fred Goodwin, expanded at huge cost.

That expansion is seen as one of the principal reasons for RBS' failure, and coupled with public distaste for the business of investment banking, cutting back on that part of the company was always likely.

“The exit of RBS from investment banking was inevitable," Alex White, a partner at BDO said in an email.

"As a state owned institution and political football, strategic decision making is subject to different influences. In investment banking you are either niche independent, a consolidator or a consolidate.

"There is no way RBS could pull off a consolidation strategy in this area and so the logical step is to sell. Whether a sale at the bottom of the market is right for the shareholders matters less than the headlines which would follow any statement about sustaining or even trying to grow this side of the business.”